Is Gold In A Bubble?

Tyler Durden's picture


With precious metals once again on the rise, the questions begin as to whether or not gold is in a bubble. While these questions never seem to occur among the cogniscenti when equity prices race ahead non-stop for months on end with no volatility, Brent Johnson (of Santiago Capital) offers up five 'facts' that help to explain why gold at $1800 is far from a bubble - especially as central banks shift from 'measured' responses to open-ended debauchment.


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Wed, 10/03/2012 - 14:29 | 2852621 Joebloinvestor
Joebloinvestor's picture

Gold will be the last bubble.

Wed, 10/03/2012 - 14:31 | 2852625 Temporis
Temporis's picture

Silver is my drug of choice.

Wed, 10/03/2012 - 14:42 | 2852690 redpill
redpill's picture

If gold was a bubble, there wouldn't be "we buy gold" advertisements everywhere.

Wed, 10/03/2012 - 14:48 | 2852718 MillionDollarBonus_
MillionDollarBonus_'s picture

"Is Gold in a Bubble?"

Unequivocally, YES. If you are tempted to buy gold at these prices, you absolutely have to stop and think. Ask yourself: what is gold useful for? Is a piece of shiny metal really worth this much money? How can gold just keep going up and up? If it’s too good to be true, it probably is. BE RATIONAL; DON’T GET CAUGHT UP IN THE MANIA. 

Wed, 10/03/2012 - 14:53 | 2852736 LULZBank
LULZBank's picture

Yes, my Gold is in a Bubble wrap.

Wed, 10/03/2012 - 15:02 | 2852762 DoChenRollingBearing
DoChenRollingBearing's picture

Gold is not in a bubble.

Gold is the single best wealth preserver in town.


Bearings of good value are pretty close...

Wed, 10/03/2012 - 15:07 | 2852783 Baron Robber
Baron Robber's picture

pretty sure LULZ just meant he bubble wrapped his gold

Wed, 10/03/2012 - 15:27 | 2852871 malikai
malikai's picture

Actually, gold most definitely is in a bubble.

Gold is in the middle of the biggest bubble on earth - the bond bubble.

Wed, 10/03/2012 - 16:31 | 2853144 THX 1178
THX 1178's picture

Which is itself a bubble composing an even larger bubble: the Dollar bubble. A bubble inside a bubble. BUBBLECEPTION.

Wed, 10/03/2012 - 16:57 | 2853272 Dr Benway
Dr Benway's picture

No gold is not in a bubble. But when the crash comes, it is likely that gold will temporarily dip, so keeping some of your wealth in fiat for that last stocking up may be advisable.

Sun, 10/21/2012 - 00:56 | 2907358 MeelionDollerBogus
MeelionDollerBogus's picture

Actually what Kyle Bass said is that a gold standard is a bad idea if you think about "it rationally". But that's completely irrational. Rationally a gold standard is ideal because it doesn't grow too fast but it does grow, it does maintain purchasing power vs goods of importance like food & energy and land, and it does remain money even if central banks go bonkers or new plastic bills melt in the sun or old paper bills get thrown in the washing machine, shredder or burned in a fire.

Wed, 10/03/2012 - 17:25 | 2853476 jekyll island
jekyll island's picture

Good luck finding any takers of your fiat for gold transaction when the crash comes.  

Wed, 10/03/2012 - 18:55 | 2853868 OutLookingIn
OutLookingIn's picture


Bad currency drives good money into hiding.

Sell your gold when this happens;

The global stock markets become honest, trustworthy, palces of true business.

The big banks are broken up into small ones.

The global financial sector once more serves the economy, instead of the other way around.

Governments drastically downsize and start realistically representing the poeples wishes.

There comes into being a solid, trustful global exchange vehicle for all business.

Large multi-national corporations are broken up into small independent entities.

Miletarists and warmongers are laid hands upon and rendered useless.



Wed, 10/03/2012 - 21:10 | 2854226 Thomas
Thomas's picture

Central bankers are in a bubble.

Wed, 10/03/2012 - 21:09 | 2854220 RiverRoad
RiverRoad's picture

Like Dr. Benway said, when the crash comes gold will temporarily dip too (look back at the charts  end of '08), that's when you make your switch from fiat to gold.

Sun, 10/21/2012 - 00:48 | 2907350 MeelionDollerBogus
MeelionDollerBogus's picture

The 2008 pattern will not repeat like that. The 2006 pattern is repeating now in a proportional manner.

2011 dec 27 gold 01 | goldpricemodel | 277 week ROC visual confirmation

be wary. Rolling forward this trend looks like this: 2012 09 18 277week roc 01 | goldpricemodel

and SPY isn't so hot 2012 09 13 spy crash soon | goldpricemodel

Wed, 10/03/2012 - 14:53 | 2852737 fuu
fuu's picture

Please DIAF, kthanxbai!

Wed, 10/03/2012 - 14:53 | 2852738 Richard Head
Richard Head's picture

Your worst troll effort to date.

Wed, 10/03/2012 - 18:19 | 2853738 Alea Iactaest
Alea Iactaest's picture

It's all about timing. Being right but being early (or late) is still wrong. In that context, the plan to pop the bubble has been set: NASA to mine asteroids. Of course no one will be able to audit the payloads but gold will be found and immediately warehoused at Ft. Knox (unless it really works and then JPM and HBC will take delivery).

Wed, 10/03/2012 - 14:58 | 2852749 ATM
ATM's picture

"Is Gold in a Bubble?"

Unequivocally, NO. If you aren't tempted to sell your chits of paper for something tangible you must be thinking that the chits will always be worth something. What are chits of paper really useful for? Is a dull piece of paper/linen really worth anything? How can a chit of paper just keep going up and up? If it's too good to be true, it probably is. BE RATIONAL; DON'T GET CAUGHT UP IN THE MANIA. OWN SOMETHING REAL RATHER THAT A CONFIDENCE SCHEME.

Wed, 10/03/2012 - 15:37 | 2852869 Sheeple Shepard
Sheeple Shepard's picture

LOL!, I fucking hate chit's of paper. When a taxi driver tells you to buy gold, sell gold.



Sun, 10/21/2012 - 00:43 | 2907347 MeelionDollerBogus
MeelionDollerBogus's picture

Thanks to the internet I don't think it will work that way this time. When the taxi driver says to buy gold & silver, and the shoe shine boy is buying silver, this time it will because everyone is being told by US to dump dollars because they aren't a viable currency. NOT because you will profit massively by selling gold and silver "at the right time".

I have now run into SEVERAL people who are total strangers admitting they buy gold and silver. NOT for re-sale. For barter & retirement. Now that's NOT a mania. Having anyone try to save anything for retirement or for prepping is a very sliver of a minority in the population even when IGNORING precious metals.

Wed, 10/03/2012 - 14:59 | 2852751 Temporis
Temporis's picture


Uncle Ben left a little of his white stuff on your chin... You might want to wipe that off.

Wed, 10/03/2012 - 15:02 | 2852756 oddjob
oddjob's picture

There is no mania, just people choosing to save and store the benefits of their hard work in sound money. That must be some frightening shit for banksters and paperbugz.

Wed, 10/03/2012 - 15:12 | 2852801 Mad Mohel
Mad Mohel's picture

This guy's bullshit is quickly losing it's comedic value. His trolling seems to be the bubble and it seems to have peaked.

Wed, 10/03/2012 - 15:21 | 2852850 NotApplicable
NotApplicable's picture

It's the same problem that's affected Saturday Night Live for so long, single dimension characters go stale quickly.

One can only tell the same joke so many times.

Wed, 10/03/2012 - 15:54 | 2852966 LMAOLORI
LMAOLORI's picture



Saturday Night Live ceased being funny when it became politically one sided years ago does anyone except die hard leftist's really even watch that show anymore?


Wed, 10/03/2012 - 19:45 | 2853957 NidStyles
NidStyles's picture

Who the fuck cares if they watch it?

Wed, 10/03/2012 - 15:37 | 2852908 edifice
edifice's picture

OK, Warren... We've just entered the mania phase of the bull market. Still has a loooong way to go...

Wed, 10/03/2012 - 16:02 | 2852991 Sneeze
Sneeze's picture

Oh MDB....

"Is the US Dollar in a bubble?"

Unequivocally, YES.  If you are tempted to buy US dollars at these prices, you absolutely have to stop and think.  Ask yourself: what is rectangular pieces of green paper useful for? Is a peice of processed pulp really worth this much labor?  How can the US Dollar just keep staying at this value when they are printing so much of it? If it's too good to be true, it probably is.  BE RATIONAL; DON'T GET CAUGHT UP IN THE MANIA

Fixed it for you

Wed, 10/03/2012 - 16:06 | 2853008 Sheeple Shepard
Sheeple Shepard's picture

Did you watch the video?

"BE RATIONAL; DONT GET CAUGHT UP IN THE MANIA" Tremendous, talk about a useful idiot.

Wed, 10/03/2012 - 16:06 | 2853010 kliguy38
Wed, 10/03/2012 - 16:17 | 2853074 GoldenDragon
GoldenDragon's picture

The question you should ask yourself:  what is paper currency useful for?  Is a piece of paper with green ink on it really worth anything?

Wed, 10/03/2012 - 18:14 | 2853721 Alea Iactaest
Alea Iactaest's picture

Its backed by the full faith and credit of the USG.

Wed, 10/03/2012 - 17:01 | 2853289 Darth Rayne
Darth Rayne's picture

No, it is on a mission. A forty five year mission. 38 years to go. It is to double in value every three years. To grow by 1.913% each month.


It's mission objective is to free mankind from slavery.


Slavery is barbaric. Please help gold whenever you can.


Free gold, free yourselves!


(I have definitely said too much this time!)

Wed, 10/03/2012 - 17:44 | 2853573 FlyingPurpleShe...
FlyingPurpleSheepleEater's picture

I have to stop and ask myself, is this little piece of paper with green ink on it worth $100 when they are printing them faster than I can wipe my ass with them?

Wed, 10/03/2012 - 19:55 | 2853977 Fedophile
Fedophile's picture

"Is the Treasury in a Bubble?"

Unequivocally, YES. If you are tempted to buy treasuries at these prices, you absolutely have to stop and think. Ask yourself, what is a treasury useful for? Is a piece of toilet paper really worth anything? How can treasuries just keep going up and up? If it’s too good to be true, it probably is.



Wed, 10/03/2012 - 22:02 | 2854411 sgorem
sgorem's picture

All joking aside millionDollarBonehead, I just want to know how in the FUCK did you get 10 GREEN weenies? You must have 10 relatives that have online access, God forbid. I think your mother is calling.........

Sun, 10/21/2012 - 00:39 | 2907342 MeelionDollerBogus
MeelionDollerBogus's picture

gold is an alpha particle deflector - radiation shielding - and as it happens many of us indirectly rely on satellite communications that depend on this shielding. Some are direct but many of us merely benefit from the financial go-ahead of the companies & militaries that use such communications, not also accounting for "benefit" of entertainment/fraud/propaganda fed by satellite consumer TV.

Rationally gold can stop going up when paper curency is NOT issued at these rates (or higher) and stops entirely, and when real interest rates are over 10%. So long as treasury yields are near 0 nominal and are negative vs real inflation for food prices, gold must go up and will go up, no less than 2500/oz. That's rational. Not mania. Mania is the 100% coverage of gold vs currency or gold vs debt. That's 12,000/oz territory & not sustainable without even more collapse stages carved in stone.

Gold is also useful for dentistry and electronic circuits.

Wed, 10/03/2012 - 14:31 | 2852646 LoneStarHog
LoneStarHog's picture

No...Gold will not enter a bubble will seek its true value and remain there.

Wed, 10/03/2012 - 14:38 | 2852677 PaperBear
PaperBear's picture

Alternatively, paper will reach it's true value which zero and stay there.

Wed, 10/03/2012 - 14:43 | 2852695 Dr. Richard Head
Dr. Richard Head's picture

I don't know about a bubble, but the S&P is slowly making  fibonacci retracement from September 25, 2012. That is another "golden" ratio to finger out.

Wed, 10/03/2012 - 17:03 | 2853302 Drachma
Drachma's picture

Let one be a number, yet another unity

And the one be to the other as their union be to the one simultaneously

Still equal to this union you will find

A magic square of the most irrational kind

Whose inverted side is but the one diminished by the other

What is that one sacred number my learned brother?

Wed, 10/03/2012 - 14:48 | 2852705 gojam
gojam's picture

LoneStarHog, Gold potentially could enter a bubble phase, especially if people begin to panic.

I don't normally minus anyone's comment but yours is so dangerous that I felt I had to. Gold is no where near a bubble now but if panic sets in it could do.

Wed, 10/03/2012 - 15:45 | 2852934 LoneStarHog
LoneStarHog's picture

There is a difference between a bubble and a spike, the latter being nowhere near the highs of an irrational bubble.  So, you have to ask yourself:  If there is a gold spike due to panic, WHAT would get in payment for your gold? Will someone be crazy enough to offer you another hard asset, like land? "Dangerous"? Think about it.

Wed, 10/03/2012 - 14:39 | 2852675 Alpo for Granny
Alpo for Granny's picture

If it is a bubble there are lots of fish at the bottom of lakes enjoying a bubble bath.

Thu, 10/04/2012 - 02:13 | 2854955 flyingpigg
flyingpigg's picture

Right, nothing wrong with bubbles. Another glass of champagne please!

Wed, 10/03/2012 - 15:34 | 2852892 killallthefiat
killallthefiat's picture

Spoken like Soros, and I totally agree.  I guess before it pops, we all have to diversify into the non bubblicious item of 50% ammo/50% canned goods.  Not yet though.

Wed, 10/03/2012 - 14:30 | 2852623 fireangelmaverick
fireangelmaverick's picture

Yes!!!!!!!!!!! Now watch the negative ratings pile up.


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